IN THE UNITED STATES PATENT AND TRADEMARK OFFICE BEFORE THE PATENT TRIAL AND APPEAL BOARD ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

Transcription

1 IN THE UNITED STATES PATENT AND TRADEMARK OFFICE BEFORE THE PATENT TRIAL AND APPEAL BOARD In re Covered Business Method Review of: U.S. Patent No. 7,334,720 Issued: February 26, 2008 Inventors: Hermen-ard Hulst and Patrick Racz Application No. 11/336,758 Filed: January 19, 2006 For: DATA STORAGE AND ACCESS SYSTEMS ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Attorney Docket No: Petitioner: Google Inc. PETITION FOR COVERED BUSINESS METHOD PATENT REVIEW OF UNITED STATES PATENT NO. 7,334,720 PURSUANT TO 35 U.S.C. 321 AND 18 OF THE LEAHY-SMITH AMERICA INVENTS ACT Mail Stop Patent Board Patent Trial and Appeal Board U.S.P.T.O. P.O. Box 1450 Alexandria, VA

2 TABLE OF CONTENTS Page I. INTRODUCTION... 1 II. PETITIONER HAS STANDING... 2 A. THE 720 PATENT IS A COVERED BUSINESS METHOD PATENT The Board Has Already Found That Claim 14 Qualifies The 720 Patent As A CBM Patent Claim 15 Also Qualifies The 720 Patent As A CBM Patent... 4 (a) (b) Claim 15 Covers Subject Matter That Is Financial In Nature... 5 Claim 15 Does Not Cover A Technological Invention... 7 III. MANDATORY NOTICES UNDER 37 C.F.R. 42.8(A)(1)... 9 A. PETITIONER IS A REAL PARTY IN INTEREST SUED FOR AND CHARGED WITH INFRINGEMENT... 9 B. RELATED MATTERS UNDER 37 C.F.R. 42.8(B)(2)... 9 C. LEAD AND BACKUP COUNSEL UNDER 37 C.F.R. 42.8(B)(2) IV. PAYMENT OF FEES V. CLAIM CONSTRUCTION A. DATA CARRIER B. USE RULE(S) AND ACCESS RULE(S) C. NON-VOLATILE DATA MEMORY AND NON- VOLATILE PARAMETER MEMORY i

3 D. PAYMENT DATA E. PAYMENT VALIDATION SYSTEM F. PAYMENT VALIDATION DATA VI. THE CHALLENGED CLAIMS ARE UNPATENTABLE UNDER 35 U.S.C A. THE CHALLENGED CLAIMS ARE DIRECTED TO A PATENT-INELIGIBLE ABSTRACT IDEA The Challenged Claims Are Directed To The Abstract Idea Of Controlling Access To Something Based On One Or More Conditions The Abstract Idea Of Controlling Access To Something Based On One Or More Conditions Is Not Patentable B. THE CHALLENGED CLAIMS DO NOT DISCLOSE AN INVENTIVE CONCEPT THAT IS SIGNIFICANTLY MORE THAN AN ABSTRACT IDEA Field Of Use Limitations Cannot Transform Abstract Ideas Into Patent Eligible Inventions Tangential References To Generic Computer Implementation Cannot Transform Abstract Ideas Into Patent Eligible Inventions C. PREEMPTION CONCERNS CONFIRM PATENT INELIGIBILITY D. THE MACHINE-OR-TRANSFORMATION TEST CONFIRMS PATENT INELIGIBILITY VII. CONCLUSION ii

4 EXHIBIT LIST Google Exhibit No. Description 1001 U.S. Patent No. 7,334,720 to Hulst et al. ( the 720 patent ) 1002 Declaration of Dr. Justin Douglas Tygar Regarding the 720 Patent 1003 Curriculum Vitae of Dr. Justin Douglas Tygar 1004 PCT Publication No. WO 99/07121 ( Fetik ) 1005 U.S. Patent No. 5,790,423 to Lau et al. ( the 423 patent ) 1006 SOFTBOOK PRESS Secure Information Delivery to a Distributed Workforce, CIO Magazine, Aug. 1, Kevin Maney, Electronic Books to Hit the Shelves, New Straits Times (Computimes), Aug. 24, Liquid Audio, Music on the Net A Topographic Tour of the Online Music World (1997) 1009 Liquid Audio Indie 1000 Program, (archived Feb. 11, 1998) 1010 Reserved 1011 Report and Recommendation Regarding Claim Construction, Smartflash LLC v. Samsung Elecs. Co., No. 6:13-cv-448, Dkt. 274 (E.D. Tex. Sept. 24, 2014) 1012 Plaintiffs Smartflash LLC s and Smartflash Technologies Limited s Opening Claim Construction Brief, Smartflash LLC v. Samsung Elecs. Co., No. 6:13-cv-448, Dkt. 175 (E.D. Tex. June 13, 2014) 1013 Supplemental Memorandum Opinion and Order Regarding Claim Construction, Smartflash LLC v. Samsung Elecs. Co., No. 6:13-cv-448, Dkt. 467 (E.D. Tex. Jan. 26, 2015) 1014 A.M. Turing, On Computable Numbers, with an Application to the Entscheidungsproblem, Proceedings of the London Mathematical Society, Vol. 42:2, pp (Nov. 12, 1936) iii

5 Google Description Exhibit No Plaintiffs Original Complaint for Patent Infringement, Smartflash LLC v. Apple Inc., No. 6:13-cv-447, Dkt. 1 (E.D. Tex. May 29, 2013) 1016 U.S. Patent No. 7,334,720 Claim Chart Google (Android), Exhibit 1 to Plaintiffs Smartflash LLC and Smartflash Technologies Limited s P.R. 3-1 and 3-2 Disclosure of Asserted Claims and Infringement Contentions, Smartflash LLC v. Google Inc., No. 6:14-cv-435 (E.D. Tex. Aug. 22, 2014) (excerpted) 1017 Reserved 1018 U.S. Patent No. 7,942,317 to Racz et al. ( the 317 patent ) 1019 U.S. Patent No. 8,033,458 to Hulst et al. ( the 458 patent ) 1020 U.S. Patent No. 8,061,598 to Racz et al. ( the 598 patent ) 1021 U.S. Patent No. 8,118,221 to Racz et al. ( the 221 patent ) 1022 Roger A. Cunningham et al., The Law of Property (2d ed. 1993) (excerpted) 1023 Michael H. Harris, History of Libraries in the Western World, (4th ed. 1999) (excerpted) 1024 David Broderick, The First Toll Roads Ireland s Turnpike Roads (2002) (excerpted) 1025 James Nicholls, The Politics of Alcohol A History of the Drink Question in England, Kindle ed. (2009) (excerpted) 1026 Jeffrey C. Price & Jeffrey S. Forrest, Practical Aviation Security Predicting and Preventing Future Threats, Kindle ed. (2d ed. 2013) (excerpted) iv

6 I. INTRODUCTION Pursuant to 35 U.S.C. 321 and 37 C.F.R , the undersigned, on behalf of and acting in a representative capacity for petitioner Google Inc., hereby petitions for review under the transitional program for covered business method patents of method claims 1 and 15 of U.S. Patent No. 7,334,720 ( challenged claims ), issued to Smart-Flash Limited and currently assigned to Smartflash LLC (the patent holder). Petitioner hereby asserts that it is more likely than not that both of the challenged claims are unpatentable for the reasons set forth herein and respectfully requests review of, and judgment against, claims 1 and 15 as unpatentable under 35 U.S.C The subject matter of the challenged claims is ineligible for patenting pursuant to controlling precedents from the Supreme Court, the Federal Circuit, and the Board. The challenged claims are explicitly drawn to the abstract idea of controlling access based on one or more conditions (such as payment). The claims recite method steps inherent in that abstract idea, such as receiving a request for access, evaluating one or more conditions for access (such as whether payment has been made), and displaying whether access is permitted. The challenged claims contain no inventive, technological limitations concerning how to perform or implement the claimed methods; at most, the claims simply convey that those 1

7 methods which have been a staple of commerce for more than a century could be performed on a generic computer. For these reasons, among others, the Board has already determined that two claims of the 720 patent (claims 13 and 14) and fifteen claims of related patents are more likely than not drawn to a patent-ineligible abstract idea and are thus unpatentable under 35 U.S.C E.g., Samsung Elecs. Am., Inc. v. Smartflash LLC, CBM , Paper 9 at 13, 16 (P.T.A.B. Apr. 2, 2015). The Board should reach the same conclusion with respect to the challenged claims here. II. PETITIONER HAS STANDING A. THE 720 PATENT IS A COVERED BUSINESS METHOD PATENT The 720 patent is a covered business method patent under Section 18(d)(1) of the Leahy-Smith America Invents Act ( AIA ), Pub. L. No , 125 Stat. 284, (2011), and petitioner certifies that it is available for review under Section (a). A covered business method patent is a patent that claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological inventions. AIA 18(d)(1); 37 C.F.R (a). The legislative history explains that the definition of covered business method patent was drafted to encompass patents 2

8 claiming activities that are financial in nature, incidental to a financial activity or complementary to a financial activity. Transitional Program for Covered Business Method Patents Definitions of Covered Business Method Patent and Technological Invention ( CBM Definitions ), 77 Fed. Reg. 48,734, 48,735 (Aug. 14, 2012) (quoting 157 Cong. Rec. S5432 (daily ed. Sept. 8, 2011) (statement of Sen. Schumer)). Financial product or service is interpreted broadly: for example, the term financial... simply means relating to monetary matters and does not require any link to traditional financial industries such as banks. E.g., SAP Am., Inc. v. Versata Dev. Grp., Inc., CBM , Paper 36 at 23 (P.T.A.B. Jan. 9, 2013). 1. The Board Has Already Found That Claim 14 Qualifies The 720 Patent As A CBM Patent The Board has already (and repeatedly) determined that the 720 patent is a covered business method patent under AIA 18(d)(1) and is eligible for review under the transitional covered business method patent program. Samsung, CBM , Paper 9 at 11; see also, e.g., Apple Inc. v. Smartflash LLC, CBM , Paper 9 at 13 (P.T.A.B. Sept. 30, 2014). In so finding, the Board focused on claim 14 of the 720 patent. Specifically, the Board found that claim 14 satisfies the financial in nature requirement of 18(d)(1) because payment data is recited in that claim. Samsung, CBM , Paper 9 at 9. And the Board found that claim 14 is merely the recitation of a combination of 3

9 known technologies, which indicates that it is not a claim for a technological invention. Id. at 10; see also id. at 11 ( [W]e conclude that claim 14 does not recite a technological invention and is eligible for a covered business method patent review. ). Based on the Board s prior conclusions with respect to claim 14, the 720 patent should be found eligible for review under the transitional covered business method patent program. See CBM Definitions, 77 Fed. Reg. at 48,736 (noting that a patent qualifies as a CBM patent if even one claim is directed to a covered business method). 2. Claim 15 Also Qualifies The 720 Patent As A CBM Patent Although the Board s previous findings with respect to claim 14 are sufficient to establish the 720 patent as a CBM patent here, challenged claim 15 further supports the same conclusion. Claim 15 recites: 15. A method of providing data from a data supplier according to claim 14 further comprising: receiving payment validation data from the payment validation system; and transmitting at least a portion of the payment validation data to the data supplier. And claim 14, from which challenged claim 15 depends, recites: 14. A method of providing data from a data supplier to a data carrier, the method comprising: reading payment data from the data carrier; 4

10 forwarding the payment data to a payment validation system; retrieving data from the data supplier; writing the retrieved data into the data carrier; receiving at least one access rule from the data supplier; and writing the at least one access rule into the data carrier, the at least one access rule specifying at least one condition for accessing the retrieved data written into the data carrier, the at least one condition being dependent upon the amount of payment associated with the payment data forwarded to the payment validation system. Because claim 15 is directed to subject matter that is both financial in nature and devoid of any technological invention, the 720 patent is eligible for review under the transitional covered business method patent program. (a) Claim 15 Covers Subject Matter That Is Financial In Nature The 720 patent relates to the idea of providing data in exchange for payment and controlling access to data based on one or more conditions (such as payment). Ex at 1:60-2:3. Indeed, the specification of the 720 patent emphasizes payment in describing the purported invention. Id. at 1:46-55 ( According to the present invention there is therefore provided a method of 5

11 providing portable data comprising... payment validation means;... reading payment information from the payment validation means using the terminal; validating the payment information;.... ); see also id. at 6:59-63 (noting that the payment data forwarded to the payment validation system may either be data relating to an actual payment made to the data supplier, or it may be a record of a payment made to an e-payment system.... ); id. at 21:6-8 ( Payment for the data item or items requested may either be made directly to the system owner or may be made to an e-payment system.... ); id. at 13:46-58 (explaining that [e]-payment systems... are coupled to banks and may be provided in accordance with MONDEX, Proton, and/or Visa cash compliant standards ); id. at 2:4-19, 3:19-27, 3:48-54, 7:62-8:9, 8:21-35 (emphasizing that the purported invention involves controlling access to data based on payment validation). Indeed, in seeking to enforce the 720 patent in litigation, the patent holder conceded that the alleged invention relates to a financial activity or transaction, stating that the patents-insuit generally cover a portable data carrier for storing data and managing access to the data via payment information and/or use status rules. Ex at 1. Claim 15 explicitly describes forwarding payment information, receiving payment validation data from a payment validation system, and transmitting that payment validation data. It thus clearly claims activities that are financial in nature, incidental to a financial activity or complementary to a financial activity. 6

12 CBM Definitions, 77 Fed. Reg. at 48,735 (quoting 157 Cong. Rec. S5432 (daily ed. Sept. 8, 2011) (statement of Sen. Schumer)); Samsung, CBM , Paper 9 at 8 ( We are persuaded that payment validation is a financial activity, and conditioning data access based on payment validation amounts to a financial service. ). (b) Claim 15 Does Not Cover A Technological Invention Claim 15 of the 720 patent does not describe a technological invention, because it does not claim subject matter as a whole [that] recites a technological feature that is novel and unobvious over the prior art[] and solves a technical problem using a technical solution. 37 C.F.R (b). Accordingly, the 720 patent does not fall into the sole statutory exception that would remove it from the definition of a covered business method patent. AIA 18(d)(1). As an initial matter, no technological feature of claim 15 is novel and unobvious. See Ex at Mere recitation of known technologies, such as computer hardware, communication or computer networks, software, memory, computer-readable storage medium, scanners, display devices or databases, or specialized machines, such as an ATM or point of sale device will not typically render a patent a technological invention. Office Patent Trial Practice Guide, 77 Fed. Reg. 48,756, 48,764 (Aug. 14, 2012). The sole technological feature recited in claim 15 is a data carrier. The 720 patent 7

13 confirms that a data carrier is in no way novel or unobvious, explaining that a data carrier may be a standard smart card, an electronic memory card, or an IC card... incorporating a processor and Flash data memory. Ex at 3:29, 11:37-38, 17: Indeed, the patent holder has argued that a data carrier is no more than a generic medium capable of storing information. Ex at 19-20; Ex at 21-22; see Ex at 49. And the 720 patent specification confirms that the asserted novelty of the [alleged] invention is not in any specific improvement of software or hardware. Samsung, CBM , Paper 9 at 10. Because claim 15 does not recite any technological feature that is novel and unobvious over the prior art, claim 15 is not a claim for a technological invention. Moreover, the subject matter of claim 15 does not solve a technical problem using a technical solution. 37 C.F.R (b). The 720 patent purportedly solves a business problem namely, the problem of consumers accessing content (like videos and music) without paying for it. Ex at 1: Indeed, the 720 patent states that there is an urgent need to find a way to address the problem of data piracy (i.e., a business problem), while simultaneously acknowledging that the physical embodiment of the system for solving that problem is not critical (i.e., the solution is not a technical one). Id. at 1:40-41, 12: Thus, for this reason as well, claim 15 does not recite a 8

14 technological invention, and the 720 patent is eligible for a covered business method patent review. III. MANDATORY NOTICES UNDER 37 C.F.R. 42.8(A)(1) A. PETITIONER IS A REAL PARTY IN INTEREST SUED FOR AND CHARGED WITH INFRINGEMENT Petitioner Google is a real party-in-interest. The patent holder s complaint in Smartflash LLC, et al. v. Google Inc., et al., No. 6:14-cv-435, pending in the Eastern District of Texas, asserts the 720 patent against the petitioner. B. RELATED MATTERS UNDER 37 C.F.R. 42.8(B)(2) The patent holder has also asserted the 720 patent in the following cases to which petitioner is not a party: Smartflash LLC, et al. v. Apple Inc., et al., No. 6:13-cv-447 (E.D. Tex.), Smartflash LLC, et al. v. Samsung Electronics Corp. Ltd., et al., No. 6:13-cv-448 (E.D. Tex.), Smartflash LLC, et al. v. Amazon.com, Inc., No. 6:14-cv-992 (E.D. Tex.), and Smartflash LLC, et al. v. Apple Inc., No. 6:15-cv- 145 (E.D. Tex.). Petitioner identifies the following administrative matters, including patent to which the 720 patent claims the benefit of priority: App n No. 10/111,716 (filed as No. PCT/GB00/4110); CBM Nos. CBM , CBM , CBM , CBM , and CBM , filed by Apple Inc.; and CBM Nos. CBM and CBM filed by Samsung Electronics America, Inc., Samsung Electronics Co., Ltd., and Samsung Telecommunications America, LLC ( Samsung ). 9

15 C. LEAD AND BACKUP COUNSEL UNDER 37 C.F.R. 42.8(B)(2) Petitioner designates Raymond N. Nimrod (Reg. No. 31,987) as Lead Counsel and Charles K. Verhoeven (pro hac vice motion to be filed), Melissa J. Baily (pro hac vice motion to be filed), and Andrew M. Holmes (Reg. No. 64,718) as Backup Counsel. Petitioner may be served at Quinn Emanuel Urquhart & Sullivan, LLP, 50 California Street, 22nd Floor, San Francisco, California (Tel: ; Fax: ) or by electronic service at the address IV. PAYMENT OF FEES Petitioner authorizes charges to Deposit Account No for the fee set in 37 C.F.R (b) for this Petition and any related additional fees. V. CLAIM CONSTRUCTION The challenged claims must be given their broadest reasonable interpretations ( BRI ). 37 C.F.R (b). When there is co-pending litigation regarding the challenged claims, the patent owner s litigation positions regarding claim scope are instructive, especially where those positions support a broad reading of the claims. See, e.g., SAP Am., Inc. v. Versata Dev. Grp., Inc., CBM , Paper 70 at (P.T.A.B. June 11, 2013). Any constructions adopted by a district court are also highly relevant because it would be incongruous to adopt a narrower construction in [a post-grant proceeding], wherein the claims are construed using the broadest reasonable interpretation 10

16 standard, than was adopted in [a district court], in which a narrower, Phillips construction standard applied. Ariosa Diagnostics v. Isis Innovation Ltd., IPR , Paper 166 at 24 (P.T.A.B. Sept. 2, 2014); Foursquare Labs Inc. v. Silver State Intellectual Techs., Inc., IPR , Paper 13 at 3-4 (P.T.A.B. Aug. 1, 2014) (revisiting and broadening a previous construction to be at least as broad as the district court s construction). In light of these principles, any constructions adopted in this proceeding should be at least as broad as those adopted by the district court in Smartflash LLC, et al. v. Samsung Electronics Co., Ltd., et al., No. 6:13-cv-448 (E.D. Tex.) and Smartflash LLC, et al. v. Apple Inc., et al., No. 6:13-cv-447 (E.D. Tex.). 1 Ariosa, IPR , Paper 166 at 24; Foursquare, IPR , Paper 13 at 3-4. Moreover, any constructions adopted in this proceeding should be heavily informed by the patent holder s positions in its various district court actions, as the patent holder should not be permitted to both wield broad constructions in an attempt to establish infringement in the district court and simultaneously seek to 1 Because the standard for claim construction here is different than the standard used in litigation, Google expressly reserves the right to argue in litigation a different claim construction for any term in the 720 patent, as appropriate to that proceeding. See In re Am. Acad. of Sci. Tech. Ctr., 367 F.3d 1359, 1364, 1369 (Fed. Cir. 2004); MPEP

17 establish validity using narrower constructions here. See SAP, CBM , Paper 70 at 20 n.16, 23; Ariosa, IPR , Paper 166 at 24; Foursquare, IPR , Paper 13 at 3-4. For these reasons and those noted below, the Board should adopt the following constructions for the terms data carrier, use rule, access rule, use status data, non-volatile data memory storing content and non-volatile parameter memory storing use status data and use rules, payment data, payment validation system, and payment validation data. A. DATA CARRIER The term data carrier is recited in both of the challenged claims. Although the Board did not find it necessary to expressly construe data carrier in connection with its previous finding that certain claims of the 720 patent are more likely than not invalid under Section 101, the Board noted that [t]he claimed data carrier... is a generic hardware device known in the prior art. Samsung, CBM , Paper 9 at 10 (noting that the specification of the 720 patent discloses that a data carrier may be a standard smart card ) (citing Ex at 11:36-39). It should also be noted that, in the Samsung and Apple district court proceedings, the patent holder contended that the data carrier claimed in the 720 patent encompasses any medium capable of storing information. Ex at The district court agreed, noting that a data carrier need not be limited to any 12

18 particular physical structure. Ex at And in the Google district court action, the patent holder has continued to assert that E.g., Ex at , 237, 409. In light of the Board s previous observations, the district court s construction in the Samsung and Apple actions, the patent holder s litigation position vis-à-vis the petitioner in the Google action, and the BRI standard applicable here, the Board should construe data carrier to mean: any medium, regardless of structure, that is capable of storing information. See Ex at B. USE RULE(S) AND ACCESS RULE(S) Challenged claim 1 of the 720 patent recites the term use rules, and challenged claim 15 of the 720 patent recites the term access rule. The Board has previously found that use rule and access rule should be given the same construction: a rule specifying a condition under which access to content is permitted. E.g., Samsung Elecs. Am., Inc. v. Smartflash LLC, CBM , Paper 7 at 6-7 (P.T.A.B. Apr. 2, 2015); Samsung Elecs. Am., Inc. v. Smartflash LLC, CBM , Paper 9 at 6-7 (P.T.A.B. Mar. 30, 2015). Using that construction for use rule and access rule, the Board has found that numerous claims in patents sharing the same specification as the 720 patent are more likely than not invalid under Section 101. E.g., Samsung, CBM , Paper 7 at 2 13

19 (claim 11 of the 458 patent); Samsung Elecs. Am., Inc. v. Smartflash LLC, CBM , Paper 7 at 2 (P.T.A.B. Apr. 2, 2015) (claim 7 of the 598 patent); Samsung, CBM , Paper 9 at 3 (claim 32 of the 221 patent); Apple Inc. v. Smartflash LLC, CBM , Paper 23 at 2 (P.T.A.B. Apr. 10, 2015) (claims 6, 8, and 10 of the 458 patent); Apple Inc. v. Smartflash LLC, CBM , Paper 22 at 2 (P.T.A.B. Apr. 10, 2015) (claims 1, 2, 15, and 31 of the 598 patent). Under that same construction for use rule and access rule, 2 the challenged claims of the 720 patent are also invalid under Section 101. See infra Part VI. 2 Petitioner notes that the Board s previous construction of use rule and access rule is much more narrow than the patent holder s interpretation of the same claim terms in the context of its district court infringement actions. (Notably, the patent holder has obtained a jury verdict of infringement against Apple based on its much broader interpretation of use rule and access rule. ) Nonetheless, because the challenged claims are invalid for failing to claim patent eligible subject matter under the Board s more narrow construction (and hence also under any broader construction), the Board s previous construction is adopted here. 14

20 C. NON-VOLATILE DATA MEMORY AND NON-VOLATILE PARAMETER MEMORY Challenged claim 1 recites the phrase non-volatile data memory storing content and non-volatile parameter memory storing use status data and use rules. In the Samsung and Apple actions, the district court construed non-volatile data memory and parameter memory according to their plain meanings. Ex at 19; Ex at 11. The district court made clear that the two recited non-volatile memories need not be physically separate from one another, finding that content need only be logically separate from the use status data / use rules within a single non-volatile memory in order to satisfy the entire limitation. Id. According to the patent holder, any degree of separation satisfies the [logically separate] requirement, even where parameters and content are stored in a single archive file and even where a generic non-volatile memory device randomly stores content at one memory address and parameters at another. See Ex at 8. In light of the district court s opinion in the Samsung and Apple actions, the patent holder s litigation position regarding the claimed non-volatile memories, and the BRI standard applicable here, the Board should construe the phrase nonvolatile data memory storing content and non-volatile parameter memory storing use status data and use rules as any generic non-volatile memory device or devices capable of assigning (randomly or otherwise) content and rules to different memory addresses. See Ex at

21 D. PAYMENT DATA Challenged claim 15 of the 720 patent recites the term payment data. The Board has not found it necessary to expressly construe payment data in connection with its previous findings that numerous claims in the 720 patent and related patents are more likely than not invalid under Section 101. E.g., Samsung, CBM , Paper 9 at Nonetheless, the breadth of the patent holder s and the district court s construction of the term payment data is worth noting here. In the Samsung and Apple actions, at the patent holder s urging, the district court construed payment data to mean data that can be used to make a payment for content. Ex at 11. In arriving at this construction, the district court stated that [t]he specification and cited claim language use payment data broadly to refer to whatever data is being used for making a payment. Id. (citing the 720 patent specification at 21:15). In the Google district court action, the patent holder has asserted that E.g., Ex at 293. In light of the district court s construction in the Samsung and Apple actions, the patent holder s litigation position vis-à-vis the petitioner in the Google district court proceedings, and the BRI standard applicable here, the Board should construe 16

22 payment data to mean: any information that can be used in connection with the process of making a payment for content. See Ex at E. PAYMENT VALIDATION SYSTEM Challenged claim 15 of the 720 patent recites the term payment validation system. Although the Board did not find it necessary to expressly construe payment validation system in connection with its previous finding that certain claims of the 720 patent are more likely than not invalid under Section 101, the Board noted that the specification of the 720 patent discloses that the required payment validation system may be one that is already in use or otherwise available. Samsung, CBM , Paper 9 at 10 (noting that the specification of the 720 patent discloses that a [t]he payment validation system may be part of the data supplier s computer systems or it may be a separate e- payment system ) (quoting Ex at 8:64-66). It should also be noted that in the Samsung and Apple actions, the district court construed payment validation system broadly to mean a system that returns payment validation data based on an attempt to validate payment data. Ex at And in the Google district court proceedings, the patent holder has identified E.g., Ex at

23 In light of the district court s construction in the Samsung and Apple actions, the patent holder s litigation position vis-à-vis the petitioner in the Google district court proceedings, and the BRI standard applicable here, the Board should construe payment validation system to mean: any system that returns information in connection with an attempt to validate payment data (wherein payment data must be construed broadly to include any information that can be used in connection with the process of making a payment for content ). See Ex at F. PAYMENT VALIDATION DATA Challenged claim 15 recites the term payment validation data. The Board has not found it necessary to expressly construe payment validation data in connection with its previous findings that numerous claims in the 720 patent and related patents are more likely than not invalid under Section 101. E.g., Samsung, CBM , Paper 9 at Nonetheless, the breadth of the patent holder s and the district court s construction of the term payment validation data is notable. In the Samsung and Apple actions, the district court ruled that payment validation data should be given its plain meaning, and the patent holder contended that, according to its plain meaning, payment validation data need not indicate that a payment has been authorized. Ex at 14-15; Ex at (citing the 720 patent 18

24 specification at, e.g., 13:53-62). In the Google litigation proceedings, the patent holder has contended that the term Ex at 224, 553. In light of the district court s construction in the Samsung and Apple actions, the patent holder s litigation position vis-à-vis the petitioner in the Google litigation proceedings, and the BRI standard applicable here, the Board should construe payment validation data to mean information returned in connection with an attempt to validate payment data (wherein payment data must be construed broadly to include any information that can be used in connection with the process of making a payment for content ). See Ex at VI. THE CHALLENGED CLAIMS ARE UNPATENTABLE UNDER 35 U.S.C. 101 Section 101 provides that: Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title. The Supreme Court has long held that this provision contains an important implicit exception namely that abstract ideas (among other things) are not patentable. Alice Corp. v. CLS Bank Int l, 134 S. Ct. 2347, 2354 (2014) (quoting Ass n for Molecular Pathology v. Myriad Genetics, Inc., 133 S. Ct. 2107, 2116 (2013)). 19

25 The Supreme Court requires a two-step analysis for determining patent ineligibility under Section 101. Id. at 2355; Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289, (2012). The first step is to determine whether the challenged claim is directed to a patent-ineligible concept[] like an abstract idea. Alice, 134 S. Ct. at If it is, the second step is to identify what else is claimed in order to determine whether the challenged claim describes an inventive concept that is significantly more than the abstract idea. Id. (quoting Mayo, 132 S. Ct. at 1294). If the challenged claim does not recite an inventive concept that is significantly more than an abstract idea, it is invalid. Id. Applying this two step-approach, the Board has already found that it is more likely than not that claims 13 and 14 of the 720 patent are invalid under Section 101. Samsung, CBM , Paper 9 at 13, 16. The Board employed a similar analysis to find fifteen claims of four related patents (each of which shares an identical specification with the 720 patent) more likely than not invalid under Section The same reasoning requires the same result here: challenged 3 In addition to claims 13 and 14 of the 720 patent, the Board has found the following claims of related patents more likely than not invalid for failing to claim patentable subject matter: claim 18 of U.S. Patent 7,942,317 (Ex. 1018), claims 1, 6, 8, 10, and 11 of U.S. Patent 8,033,458 (Ex. 1019), claims 1, 2, 7, 15, 20

26 claims 1 and 15 of the 720 patent are directed to unpatentable subject matter and are thus invalid under Section 101. A. THE CHALLENGED CLAIMS ARE DIRECTED TO A PATENT-INELIGIBLE ABSTRACT IDEA The abstract ideas category of patent ineligible subject matter is grounded in the longstanding rule that an idea of itself is not patentable. Alice, 134 S. Ct. at 2355 (quoting Gottschalk v. Benson, 409 U.S. 63, 67 (1972)) (internal quotation marks omitted). Abstract ideas include fundamental economic practice[s] long prevalent in our system of commerce, building block[s] of the modern economy, and other method[s] of organizing human activity. Alice, 134 S. Ct. at 2356; see also, e.g., Bilski v. Kappos, 561 U.S. 593, 611 (2010). Accordingly, the Supreme Court has found concepts such as intermediated settlement, protecting against risk, and monitoring operating conditions for alarm limits to be examples of abstract ideas that are patent ineligible. Alice, 134 S. Ct. at ; Bilski, 561 U.S. at ; Parker v. Flook, 437 U.S. 584, (1978). and 31 of U.S. Patent No. 8,061,598 (Ex. 1020), and claims 1, 2, 11, and 32 of U.S. Patent No. 8,118,221 (Ex. 1021). Samsung, CBM , Paper 7 at 2; Samsung, CBM , Paper 7 at 2; Samsung, CBM , Paper 9 at 3; Apple, CBM , Paper 23 at 2; Apple, CBM , Paper 23 at 2; Apple, CBM , Paper 22 at 2; Apple, CBM , Paper 15 at 2. 21

27 Patent claims related to long-familiar commercial transactions and relationships, no matter how narrow or particular, are directed to abstract ideas as a matter of law. buysafe, Inc. v. Google, Inc., 765 F.3d 1350, (Fed. Cir. 2014). So, for example, the transaction of advancing funds based on future retirement payments, though specific, is squarely within the realm of abstract ideas. U.S. Bancorp v. Retirement Capital Access Mgmt. Co., CBM , Paper 33 at 13 (P.T.A.B. Aug. 22, 2014). And the recitation of a process for showing an advertisement before delivering free content i.e., by receiving copyrighted media, selecting an ad, offering the media in exchange for watching the selected ad, displaying the ad, allowing the consumer access to the media, and receiving payment from the sponsor of the ad though particular, is an abstract idea, devoid of a concrete or tangible application. Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 715 (Fed. Cir. 2014). 1. The Challenged Claims Are Directed To The Abstract Idea Of Controlling Access To Something Based On One Or More Conditions Each of the claims challenged here is drawn on its face to the abstract idea of controlling access to something based on one or more conditions (such as payment). See Ex at 60. The specification of the 720 patent confirms that the invention relates to providing access and paying. Ex at 1:5-9; see Ex at 61. And the Board previously found that: The 720 patent makes 22

28 clear that the heart of the claimed subject matter is restricting access to stored data based on supplier defined access rules and validation of payment. Samsung, CBM , Paper 9 at 14 (emphasis added) (citing Ex at 1:60-2:3). More specifically, pursuant to its BRI, the method of controlling access of challenged claim 1 recites four steps inherent in the abstract idea of controlling access : (i) receiving a data access request from a user for at least one content item (e.g., receiving a request for a book); (ii) reading the use status data and use rules... that pertain to use of the at least one requested content item (e.g., reading information regarding how many times the book has been accessed and the maximum number of times the book may be accessed); (iii) evaluating the use status data using the use rules to determine whether access to the at least one requested content item... is permitted (e.g., evaluating whether a book has been accessed less than the maximum number of times); and (iv) displaying to the user whether access is permitted for each of the at least one requested content item (e.g., displaying to the user whether the book can be accessed). Similarly, pursuant to its BRI, the method of providing data from a data supplier of challenged claim 15 recites eight steps inherent in the abstract idea of controlling access based on the condition of payment. Six of those steps are set forth in claim 14 (from which challenged claim 15 depends): (i) reading payment data (e.g., reading credit card information); (ii) forwarding the payment data to a 23

29 payment validation system (e.g., forwarding the credit card information to a system for validation); (iii) retrieving data from the data supplier (e.g., retrieving the text of a book from a supplier); (iv) writing the retrieved data (e.g., delivering a book to a reader); (v) receiving at least one access rule from the data supplier (e.g., receiving a rule for accessing the book from the book supplier); and (vi) the at least one access rule specifying at least one condition for accessing the retrieved data..., the at least one condition being dependent upon the amount of payment associated with the payment data forwarded to the payment validation system (e.g., receiving a rule for accessing the book based on the amount paid for example, access for one day for $1, access for two days for $2). Notably, this combination of steps (set out in claim 14) has already been found more likely than not invalid for failing to claim patent-eligible subject matter under Section 101. Samsung, CBM , Paper 9 at The two limitations added by dependent claim 15 are simply additional method steps inherent in the abstract idea of controlling access based on payment: (i) receiving payment validation data from the payment validation system (e.g., receiving confirmation that a credit card number is valid); and (ii) transmitting at least a portion of the payment validation data to the data supplier (e.g., transmitting the credit card number confirmation to the book supplier). Nothing about the two added limitations differentiates claim 15 (challenged here) from 24

30 claim 14 (previously found more likely than not invalid) for purposes of the Section 101 analysis. Indeed, the Board has already found that the limitations added to claim 14 by challenged claim 15 are more likely than not insufficient to render claimed subject matter patent-eligible. 4 All of the steps recited by the challenged claims can be performed without a computer, see Ex at 65, and simply recite the disembodied concept of controlling access to something based on one or more conditions (such as 4 With respect to the limitation receiving payment validation data from the payment validation system in challenged claim 15, the Board has already found the limitation code to receive payment validation data from the payment validation system more likely than not insufficient to render patent-eligible the subject matter of claim 13 of the 720 patent and claims 1 and 32 of the related 221 patent. E.g., Samsung, CBM , Paper 9 at (finding claim 13 of the 720 patent more likely than not invalid); Samsung, CBM , Paper 9 at (finding claims 2, 11, and 32 of the 221 patent more likely than not invalid). With respect to the limitation transmitting at least a portion of the payment validation data to the data supplier in challenged claim 15, the Board has already found the limitation code to transmit at least a portion of the payment validation data to the data supplier more likely than not insufficient to render patent-eligible the subject matter of claim 2 of the 221 patent. Id. 25

31 payment). Ultramercial, 772 F.3d at (finding that the steps of receiving copyrighted media, selecting an ad, offering the media in exchange for watching the selected ad, displaying the ad, allowing the consumer access to the media, and receiving payment form the sponsor of the ad all describe an abstract idea, devoid of concrete or tangible application ); SAP Am. Inc. v. Versata Dev. Grp., Inc., CBM , Paper 70 at 29 (June 11, 2013) (finding an idea to be abstract if it represents a disembodied concept ). The challenged claims are thus directed to an abstract idea. E.g., Alice, 134 S. Ct. at ; Ultramercial, 772 F.3d at ; SAP, CBM , Paper 70 at 10; see Ex at The Abstract Idea Of Controlling Access To Something Based On One Or More Conditions Is Not Patentable The concept of controlling access based on one or more conditions is even older and more commonplace than the concepts that the Supreme Court determined to be patent ineligible abstract ideas in Alice, Bilski, and Flook. Controlling access to something based on payment (e.g., monthly access to an apartment based on the payment of rent, a rental of a DVD from Blockbuster for $2.99 per day, etc.) is a building block of the modern economy. See Alice, 134 S. Ct. at 2356; see also, e.g., Ex at (summarizing history of leasehold estates, including payment of rent for access); Ex at 187 (summarizing history of libraries, including those that made available rental books for a small fee in the 1700s); Ex at vi (noting that, by the 1600s, payment of a prescribed sum of money 26

32 would permit use of a certain length of road ). And controlling access to something based on any generic criterion (e.g., access to liquor based on proof of age, access to an airport based on proof of identity and compliance with security rules, etc.) has been a longstanding method of organizing human activity. See Alice, 134 S. Ct. at 2356; see also, e.g., Ex (summarizing the history of the regulation of access to liquor); Ex (recounting historical regulations governing access to airplanes and airports). There is thus no viable dispute that: (i) the challenged claims of the 720 patent are directed to the concept of controlling access based on a condition such as payment and (ii) that concept is an abstract idea that falls outside the scope of Section 101. Indeed, two claims of the 720 patent (and fifteen claims of related patents) drawn to the same subject matter as the claims challenged here have already been found to be directed to an abstract idea based on the record before the Board when it instituted the now-pending review of those claims. Samsung, CBM , Paper 9 at 14; see also supra n.2. What is more, one of the claims challenged here (claim 15 of the 720 patent) depends from one of the claims the Board previously found to be directed to an abstract idea (claim 14 of the 720 patent). Samsung, CBM , Paper 9 at If claim 14 of the 720 patent is directed to an abstract idea, then claim 15 of the 720 patent must also be directed to the same abstract idea. 27

33 The challenged claims satisfy the first step of the patent ineligibility test. B. THE CHALLENGED CLAIMS DO NOT DISCLOSE AN INVENTIVE CONCEPT THAT IS SIGNIFICANTLY MORE THAN AN ABSTRACT IDEA Because the challenged claims are drawn to abstract ideas, the additional features recited in those claims must be analyzed to determine whether they add an inventive concept that is significantly more than the claimed ideas. Alice, 134 S. Ct. at The small number of additional features present in the challenged claims fall into two categories, both of which the Supreme Court has already found insufficient to bring a patent claim within the scope of Section 101: field of use limitations and generic computer implementations. E.g., id. at ; see also, e.g., SAP Am., Inc. v. Versata Dev. Grp., Inc., CBM , Paper 36 at 29 (P.T.A.B. Jan. 9, 2013) (noting that, to be patent eligible, a claim must contain more than mere field-of-use limitations, tangential references to technology, insignificant pre- or post-solution activity, ancillary data-gathering steps, or the like ). 1. Field Of Use Limitations Cannot Transform Abstract Ideas Into Patent Eligible Inventions The prohibition against patenting abstract ideas cannot be circumvented by attempting to limit the use of ideas to a particular technological environment or to a single field of use. Bilski, 561 U.S. at ; see also SAP, CBM , Paper 36 at 29. For example, the idea of hedging does not become 28

34 patentable when it is applied to commodities in the energy market, and the idea of automatic monitoring-alarming does not become patentable when it is applied to a catalytic conversion process. Bilski, 561 U.S. at 612; Flook, 437 U.S. at Here, the challenged claims purport to limit the idea of controlling access based on one or more conditions to the field of controlling access to data based on one or more conditions. See Ex at 62. But the idea of controlling access is an abstraction that does not become patentable just because that abstraction is applied to data or even more specifically to content data like text, videos, games. Ex at 1:11-14; e.g., Bilski, 561 U.S. at ; Flook, 437 U.S. at ; Ultramercial, 772 F.3d at ; SAP, CBM , Paper 36 at 29. Accordingly, the field-of-use limitation of the challenged claims is insufficient to bring the subject matter of those claims within the scope of Section Tangential References To Generic Computer Implementation Cannot Transform Abstract Ideas Into Patent Eligible Inventions Beyond (i) reciting steps inherent in the abstract idea of controlling access based on one or more conditions (like payment) and (ii) applying those steps to the particular field of content data (e.g., books, movies, games), the challenged claims make tangential references to a small number of generic computer components and functions, without disclosing any novel or unusual improvement 29

35 to the functioning of the computer itself. Alice, 134 S. Ct. at ; see also SAP, CBM , Paper 70 at 29. In other words, the claims do not supply an inventive concept in the physical realm of things and acts i.e., a technological innovation. buysafe, 765 F.3d at 1353; see also Alice, 134 S. Ct. at The challenged claims are thus patent ineligible. E.g., id.; buysafe, 765 F.3d at Specifically, the challenged claims make reference to four generic computer concepts: a data carrier (as construed, a medium capable of storing information ), non-volatile memory, the storage of data in memory, and the writing of data to memory. These tangential references to computer hardware and functionality simply convey that the abstract idea of controlling access to content based on one or more conditions a disembodied concept long underlying various types of commercial activities may be performed with a generic computer. SAP, CBM , Paper 70 at 29-30; see Ex at Indeed, the Board has previously found that each of the generic computer concepts recited in the challenged claims of the 720 patent is insufficient to transform the claimed abstract idea into patent-eligible subject matter. For example, the Board has found that, in accordance with the 720 patent specification, the claimed data carrier may be a generic, known, hardware device such as a standard smart card. Samsung, CBM , Paper 9 at 15 (citing 30

36 Ex at 11:36-39); see also id. at 10. Similarly, the Board has already found that the specification of the 720 patent and related patents treats as well known the nonvolatile memory of the challenged claims. Apple Inc. v. Smartflash LLC, CBM , Paper 23 at 19 (P.T.A.B. Apr. 10, 2015) (finding claim 1 of the 458 patent which recites nonvolatile data memory and nonvolatile payment data memory as invalid for failing to claim patent eligible subject matter); SAP, CBM , Paper 70 at 30 (characterizing memory and storage as generic general purpose computer hardware ). And the Board has already found the claimed functions of storing and writing data to memory to be purely conventional. Samsung, CBM , Paper 9 at 15 (finding code to receive/retrieve/write data to be purely conventional ); Samsung Elecs. Am., Inc. v. Smartflash LLC, CBM , Paper 7 at 9, 13 (P.T.A.B. Apr. 2, 2015) (noting that the specification treats as well-known all potentially technical additions to claim 7 of the 598 patent, including code for storing ). Accordingly, the challenged claims implement the abstract idea of controlling access via routine, conventional activity. Metavante Corp. v. Checkfree Corp., CBM , Paper 50 at (P.T.A.B. Dec. 22, 2014) (distinguishing DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245 (Fed. Cir. 2014) on the basis that the challenged claims did not override[] a routine and conventional sequence of events and were thus invalid under Section 101); see 31

37 Ex at Stating an abstract idea while adding the words apply it with a computer as the challenged claims substantively do here is not patenteligible subject matter. Alice, 134 S. Ct. at Thus, the recitation of generic computer hardware (such as a data carrier and nonvolatile memory) and generic computer functionality (such as storing and writing) cannot transform a patentineligible abstract idea into a patent-eligible invention. Id. at 2358; see also id. at (finding the recitation of a data storage unit, creat[ing] electronic records, track[ing] multiple transactions, and issu[ing] simultaneous instructions insufficient to bring a patent claim within the scope of Section 101); see also buysafe, 765 F.3d at 1355 (finding that sending and receiving data over a network is not even arguably inventive and affirming invalidity of patent claims under Section 101); SmartGene, Inc. v. Advanced Biological Labs., SA, 555 F. App x 950, 955 (Fed. Cir. 2014) ( The claim does not purport to identify new computer hardware: it assumes the availability of physical components for input, memory, look-up, comparison, and output. ); Planet Bingo, LLC v. VKGS LLC, 576 F. App x 1005, 1009 (Fed. Cir. 2014) (holding computerized system unpatentable because the nature of the function performed by the computer at each step, storing, retrieving, and verifying numbers, is purely conventional ). The challenged claims are thus invalid under Section